Passd by the U.S. Congress in 1890, the first measure meant to prohibit trusts. Named after its sponsor, Senator John Sherman, who was an expert on the regulation of commerce.
The act, based on the constitutional power of Congress to regulate interstate commerce, declared that every contract, combination (in the form of trust or otherwise), or conspiracy that acted in restraint of interstate and foreign trade was illegal. This prohibition applies not only to cartels but also to agreements to fix prices, share markets, limit industrial output, or exclude competition. A second provision makes all attempts to monopolize any part of trade or commerce within the United States illegal.
Firms violating the Act can be dissolved by the courts, and injunctions can be issued to prohibit illegal practices. Violations are punishable by fines and/or imprisonment. Private parties injured by such violations can sue for triple the amount of any damages.
Ironically, its only effective use at first was against trade unions, which were held by the courts to be illegal combinations.
Followed up by the Clayton Antitrust Act (1914) and the establishment of the Federal Trade Commission (FTC). The latest revision was the Hart-Scoss-Rodino Anti-Trust Improvement Act (1976) which dealt with mergers.
The Sherman Act was the basis of the complaint that lead to the American Telephone and Telegraph (AT&T) breakup in 1982. Recently, U.S. District Judge Thomas Penfield Jackson ruled that Microsoft violated the Sherman Antitrust Act by "unlawfully tying its Web browser to its operating system" and also could be sued under state anti-competition laws.